20% reduction in subsidy

I was asked the other day whether I thought the proposed 20% increase in planning fees would lead to increased resources in planning departments. It was a live interview, so my innate grumpiness and cynicism meant that I answered in the negative. Since then I have been thinking about that question a bit more deeply, so I thought I would unpack my thoughts on it and see if I would answer differently today.

The fee increase

A quick summary then. DCLG have written a “dear CEx” letter to all planning authorities, offering them a deal. In this letter they say that councils can charge an extra 20% on top of the nationally set planning fees if they can demonstrate that this extra income is spent on planning services. The proposal is an offer of a voluntary ring-fence to councils. Most people I know have accepted it, and will work out the details as they go – although I’ve also heard that some councils are turning it down. 

It is clear that the case has been made (and been heard) about the resources and capacity problems in council planning departments, and that this case is supported by industry. And it is true that a 20% + 20% fee increase [the letter also sets out the idea that there could be a further 20% increase in the future for councils who deliver] will on aggregate make up most of the shortfall between council’s costs and incomes.

So, what’s the problem? There are three issues that I can think of, and it is only the short-term ones that people are talking about at the moment.

  1. What are we allowed to spend this money on? This question is raised at all the events on the housing white paper we’ve been running. People have spotted that the letter refers in one place to “development management” and in another place to “planning services”. Section 151 officers are cautious people, and some are wanting a bit of direction about how sharply defined the target group needs to be. My view is that we don’t need further clarification. Common sense applies.
  2. How can I spend this money well? This might feel like a slightly ungrateful point, but people point to the fact that all this is happening in March. Departmental budgets are set, the haggling has finished. Suddenly bonus cash arrives – it is a tricky corporate conversation to argue that suddenly extra resources are required to service it. And, in some employment hot spots, it is genuinely difficult to see how extra capacity is going to be created. In London there is a strong possibility that the extra cash will just serve to further overheat the agency market.
  3. Will it lead to increased capacity?  This is where it gets a bit metaphysical. Remember that fees don’t really match the cost for different categories of application. Sometimes this is really obvious (trees and heritage are *free*) and sometimes it is less so (applications for really big things have a fee based on footprint and sometimes are really easy to do). This means that planners have to operate a service where work is disconnected from income. A few planners are “lucky” and have really big applications and will generate a surplus for their councils. Most planners are “unlucky” with only small applications and require a surplus from their councils [M&W planners with fracking licenses are in a field of unlucky all of their own]. All planners are involved in a tricky year-by-year guessing game because patterns of major development are unpredictable. You can see what this looks like. So, one consequence of a fee hike to councils who already make a profit is more profit. More commonly it will lead to a reduction in the subsidy required by the council.

So, in my view, there will be too many other calls on the subsidy that gets freed up by the increase in fees. It won’t be true everywhere, but taken together I think the result of the 20% increase in fees will not be a 20% increase in capacity*. And therefore there is a real risk that industry, whose support for this change has been notable, will not see an improved service in return for this higher charges. This leads on to an unhappy place.

What to do?

This is a tricky situation. We cannot afford for the situation to unfold where collectively we let costs rise without being seen to improve services, because that is against nature. However it is also true that one persons’s 20% increase in fees is another’s 20% decrease in public subsidy for applicants.

I would suggest that we have to reframe the debate. The reason this situation feels peculiar is that we have inherited a weird situation of politically expedient national fees disconnected from costs. And no amount of across-the-board percentage increases is going to address the arbitary way that costs and fees land in each individual council.

Its not going to be fun, but what we need to do is simple:

  1. Remove public subsidy from planning
  2. Accept that development management requires enforcement and plan-making too
  3. Redesign the system to remove the most obvious pointless bureaucracy
  4. Rebase fees based on costs.

 

I reckon, with goodwill on all sides, we could probably do this job without too much pain for applicants. What I think I have been personally quite slow to see is that we should not try to fix costs based on current practise. We should be braver than that and redirect effort where it is needed first. Discard before tidying. Ask first – “does this process bring me joy ?” before understanding the price.

* There is a related point to be made about capacity (humans) in the planning system. There are not enough new planners being made to replace planners leaving the system already, and to expect a step change of 20% requires some new thinking about the sort of people we can call planners and their route to work**.

** The HWP does pick up capacity as an issue in many places, so I’m hopeful that this cash boost will not be the only thing to flow from it.

 

Advertisements

2 thoughts on “20% reduction in subsidy

  1. Overall, the mistake government has made is to equate ‘resources’ with ‘cash’ – too narrow a definition and therefore why all of the resourcing issues are seen in ‘short term, terms’ when the real solutions are long(er) term; getting your policy framework in place & getting a team of planners with the right skills and capacity to deliver it .

    What do we spend the extra income on? The Housing White Paper (HWP) majors on getting plans in place which is a better investment of the 20% fee increase in my view. Spend on getting the plan right and then get your DM planners to deliver it – more cost effective than just having more people to process the speculative, hostile, resource-sapping, appeal cost-causing applications received because the local plan is absent or out-of-date.

    Getting planners and skills back into the system; the HWP makes some promising noises but then only delivers cash. It has paragraph after paragraph of how it is going to support the building industry to recruit and retain the right skills and capacity to build houses with apprenticeships, and national skills programmes etc but nothing to address the long term recruitment and retention issues facing planning – I have had a quick look at these skills programme things and there’s nothing about planning – housing officers is about as close as it gets – hopefully I’m wrong about that.

    The other thing about people is that there is a perception that anyone any good will eventually be won to the private sector with a better salary and more interesting/exciting work.

    My final solution

    Like RichardPrichard I agree it involves charging real and local fees. I would go one step further and introduce competition into the market. It is the only way I can see local fees being accepted and would level the playing field when it comes paying salaries and offering the kinds of work that planners want to be involved in.

    • Well, the idea that competition is necessary to provide downward pressure on local fees is (to my mind) a reason to avoid local fees. Most councils lack the appetite and capacity for local cost analysis anyway.
      National fees remains the answer, but national fees done correctly. Perhaps regional, but definitely not local. Too many bad things could happen.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s